US STOCKS-Dow, S&P hit 12-yr lows on GM, banks and GE woes

                                
 * GM stock off over 15 pct on possible bankruptcy warning
                                
 * Citigroup shares fall below $1, financials drag
                                
 * Worries of troubles in finance arm of GE weigh
                                
 * Dow off 4.1 pct, S&P off 4.3 pct, Nasdaq down 4 pct
                                
 * For up-to-the-minute market news, click [STXNEWS/US]
 (Adds details on Wal-Mart, Pfizer and Friday's jobs data,
plus volume figures)
                                
 By Leah Schnurr
                                
 NEW YORK, March 5 (Reuters) - U.S. stocks slid on Thursday
with the Dow and S&P falling to 12-year lows as General
Motors' warning of possible bankruptcy and concerns about the
banking system's fate reinforced investors' reluctance to take
on risk.
                                
 The previous session's rally proved fleeting as worries
about the financial system's health hit bank stocks again and
investors focused on the possibility that troubles in the
finance arm of widely held General Electric <GE.N> could lead
to a debt rating downgrade for the entire company.
                                
 GE's stock was down 0.5 percent at $6.66 after falling to
its lowest since 1991 a day earlier. Uncertainty about the
exposure of U.S. banks to GE remained a significant concern
and the S&P financial index <.GSPF> fell nearly 10 percent.
                                
 Shares of Citigroup <C.N>, once the world's largest bank
by market value, fell as low as 97 cents during the session,
trading below $1 for the first time. [ID:nN05328477]. Anxiety
rose over whether the bank can be restored to health or
whether it will have to be taken over by the government.
                                
 "The loss of confidence is pervasive. There isn't any
magic bullet here that's going to save Citi or Bank of
America. The only thing that might save them is if the
government comes in and sponsors a bankruptcy," said John
Schloegel, a vice president of Capital Cities Asset Management
in Austin, Texas.
                                
 The Dow Jones industrial average <.DJI> fell 281.40
points, or 4.09 percent, to 6,594.44. The Standard & Poor's
500 Index <.SPX> lost 30.32 points, or 4.25 percent, to
682.55. The Nasdaq Composite Index <.IXIC> dropped 54.15
points, or 4.00 percent, to 1,299.59.
                                
 General Motors <GM.N> shed 15.5 percent to $1.86 after its
auditors raised "substantial doubt" about the automaker's
viability if it fails to head off losses and stop burning
through cash. [ID:nN05319669]
                                
 Investors worry that GM's collapse would send shock waves
through the recession-hit U.S. economy, given that it is a
major employer and buyer of supplies from auto parts makers.
                                
 NASDAQ AT 6-YEAR LOW
                                
 The Nasdaq closed at its lowest level since March 2003, a
month remembered for the beginning of the Iraq war. Both the
Dow and S&P 500 are down more than 24 percent for the year so
far, with the broad S&P shedding 56 percent from 2007's
all-time high. U.S. stocks have lost around $11 trillion in
value since hitting all-time highs in October 2007.
                                
 Indexes more than gave back Wednesday's rally, which was
spurred by news of a Chinese economic stimulus plan. But those
hopes were dashed on Thursday morning when Premier Wen Jiabao,
speaking to parliament, did not announce any expansion of
China's stimulus package.
                                
 Moody's Investor Service said on Wednesday it may cut its
ratings on Wells Fargo <WFC.N> and Bank of America <BAC.N>,
helping drive Wells Fargo down 15.94 percent at $8.12 and
pushing Bank of America down 11.7 percent at $3.17.
                                
 Citigroup's stock closed at $1.02, down 11 cents, or off
9.7 percent for the day in NYSE trading.
                                
 Exxon Mobil <XOM.N> was the Dow's biggest drag, dropping
5.3 percent to $62.22 as U.S. front-month crude <CLc1> lost
$1.77 to settle at $43.61 a barrel, pressured by deteriorating
global economic prospects.
                                
 On the upside, shares of Wal-Mart <WMT.N> added 2.6
percent to $49.75 after the world's largest retailer posted
solid monthly sales and raised its annual dividend by 15
percent. [ID:nN05461432] Of the 30 Dow industrials, only two
-- Wal-Mart and Pfizer <PFE.N> -- finished higher. Pfizer
gained 1.4 percent to $12.67 after Goldman Sachs reinstated
coverage with a "buy" rating.
                                
 DIRE JOBS REPORT EXPECTED
                                
 Grim economic reports signaling more fallout from the
recession added to the negative tone ahead of Friday's key
non-farm payrolls report. Data is expected to show the economy
shed 648,000 jobs in February, while the unemployment rate is
expected to rise to a 25-year high of 7.9 percent, according
to a Reuters poll of economists.
                                
 Indeed, the White House said that it doesn't expect to see
good news out of the jobs report.
                                
 A report on Thursday showed new orders received by U.S.
factories fell for a sixth straight month in January. The
Mortgage Bankers Association said that one in every eight U.S.
households with mortgages, a record share, ended 2008 behind
on their payments or in foreclosure. [ID:nN05306148].
                                
 Trading was active on the New York Stock Exchange, with
about 1.88 billion shares changing hands, above last year's
estimated daily average of 1.49 billion, while on Nasdaq,
about 2.34 billion shares traded, above last year's daily
average of 2.28 billion.
                                
 Declining stocks outnumbered advancing ones on the NYSE by
about 12 to 1, while on the Nasdaq, about six stocks fell for
every one that rose.
                                
 (Editing by Jan Paschal)